The biggest Swedish pension fund has barred Israeli defense electronics company Elbit Systems from its investment portfolios on ethical grounds, Israel Radio reported Monday.

Following the lead of Norway's state oil fund, the Första AP-Fonden pension fund said it had banned investment in Elbit because the Israeli company had built and is operating a surveillance system for the much debated West Bank separation barrier.

Critics of the controversial barrier argue that it is an illegal attempt to annex Palestinian land under the guise of security and that it severely restricts Palestinians who live nearby, particularly their ability to travel freely within the West Bank and to access work in Israel. Proponents, however, argue that the barrier has greatly reduced the incidence of suicide bombers coming from the West Bank and carrying out terror attacks within Israel.

According to the Swedish website the Swedish Wire, the pension fund said in a statement that "the Ethical Council recommended that Elbit Systems Ltd. should be excluded from each portfolio because it deems that the company can be linked to violations of fundamental conventions and norms."

In its annual report, the ethical council wrote that "the Council has noted that both the European Union and the Swedish government consider the part of the separation barrier being built on West Bank to be illegal under international law. This position is also supported by the advisory opinion from 2004 by the International Court of Justice regarding the separation barrier."

Israel has so far completed 413 kilometers (256 miles) of the planned 709-kilometer (435-mile) barrier, according to UN figures.

The Swedish fund, which only had small investments in Elbit according to its ethics council chairwoman Annika Andersson, said that Grupo Ferrovial, PetroChina, Thales and Yahoo had successfully addressed its concerns about ethics violations.

Last September, Norway's state pension fund, one of the world's biggest investors, also banned Elbit from its portfolio, prompting the Israeli Foreign Ministry to summon Norway's ambassador in protest at the move.